When a new stock pops up to my attention, the first thing I look at is its daily trading range. On the right side of the chart in blue you can see CEG for example has had a $2 trading range so far. I don't waste my time on something that has a .30 trading range. I am unable to make anything out of a stock like that. Then I check daily volume, the more the better, and the spread, the less the better. These details can be gleaned in a second and that's all I need to make a decision. The fact that a stock is hitting new highs or lows means that it is in play and the probability is that it will produce a good trade.
Thursday, August 13, 2009
What makes a good trading stock in my eyes
When a new stock pops up to my attention, the first thing I look at is its daily trading range. On the right side of the chart in blue you can see CEG for example has had a $2 trading range so far. I don't waste my time on something that has a .30 trading range. I am unable to make anything out of a stock like that. Then I check daily volume, the more the better, and the spread, the less the better. These details can be gleaned in a second and that's all I need to make a decision. The fact that a stock is hitting new highs or lows means that it is in play and the probability is that it will produce a good trade.
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7 comments:
When I first started to read your blog, I wondered why you never looked for opportunity to trade at the start of the bell. It finally clicked in my head that your HOD list isn't very valuable right at the start, since stocks would be at the HOD right away. It only after the market has had some time to flow, that the true momentum plays show up, and the HOD list gives some legitimate plays for the day.
CN- Actually I prefer to sleep in for that hour since I'm on the west coast and it's pretty damn early to get anyway.
By the time I start some stocks have shown what they are doing and it's easier to see trends.
Always nice to have a strategy that works with your sleep schedule!
when you see a stock hitting new highs/lows are you getting in right away, or waiting for a setup? i usually get in right away and end up getting jiggled out. i am just wondering how you do it so well. thanks
Joshua,
If it's making new highs/lows, thats all I need to know. Managing the trade takes the skill. To know when to enter or wait for a pullback/bounce is the art. Sorry I can't be more specific but every trade situation is unique.
i understand and i agree. i just jump the gun. in time, i will get there. just need to keep the positive attitude. i think i am at the point in my trading where mark douglas says "you will mislead yourself into believing that your trading problems and lack of success can be rectified through market analysis." yes, i agree with him that i don't need 100 indicators, but i do feel i need to get better at reading the tape, a'la blue collar trader.
Hi
I have been visiting your blog and I like your trading style I am preety new my self In day trading no big wins yet still learning any how I like to know which broker you use who have the realtick platform and If you can shit some light on moving avrages that you use that would be awesome
thnaks and be in bliss
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